Starbucks posts grande earnings

By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- Starbucks Corp.'s fiscal first-quarter profit soared and topped Wall Street's forecast Wednesday as the upscale coffee retailer boosted its outlook for 2010.

The world's largest coffee chain reported a profit of $241.5 million, or 32 cents per share, during the three months ended Dec. 27, which was a nearly four-fold rise from a year ago.

Stripping out restructuring charges, Starbucks posted an adjusted profit of 33 cents per share. Analysts polled by Thomson Reuters, who typically exclude one-time items from their forecasts, expected 28 cents per share.

The Seattle-based company's quarterly sales rose to $2.7 billion, a 4% climb compared with the same period in the prior year. The revenue beat analysts' forecast of $2.6 billion.

"Continued innovation, the successful enhancement of the customer experience and a transformed, more efficient cost structure have brought Starbucks to a significant milestone -- a return to positive growth," said Howard Schultz, chairman, president and chief executive of the company, in a statement.

During a conference call, Shultz added that Starbucks' performance during the holiday season was the best in the company's history, with the Caramel Brulee Lattee, which was launched during the season, lifting beverage sales by 30%.

He also said that Starbucks' new line of instant coffee called Via outperformed expectations and was a highlight for the quarter.

Same-store sales, which measure sales at stores open at least a year and are a key gauge of customer traffic, grew for the first time since 2007, with a 4% uptick worldwide and a 4% boost in the United States. In its last forecast, Starbucks said it expected a rise in same-store sales in 2010.

While analysts expected the pick-up in sales, the increase was a surprise said Buckingham Research's Mitchell Speiser, who expected a 2% hike.

From mid-2008 to 2009, Starbucks closed 800 stores in the U.S. and 100 international locations, laid off workers, revamped its food menu and tinkered with drink prices. The company's cost-cutting initiatives saved $580 million in 2009.

"Starbucks' combination of value initiatives, improved food quality and focus on wellness, and new loyalty programs that are encouraging frequency helped it deliver a high quality earnings report," Speiser said. "They've brought it all together this quarter and that will give them momentum going forward."

Starbucks raised its outlook and said it expects to earn between $1.05 and $1.08 per share for the full year. In its last forecast, the company said it expected to earn between 92 and 96 cents per share in 2010.

As announced last fall, Starbucks maintains its target to open 100 stores in the United States and 200 in international markets during 2010.

Shares of Starbucks (SBUX, Fortune 500) surged more than 3% in after-hours trading, after falling 1.2% during regular hours.  To top of page

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